question archive Inventory per physical count on December 31, 2020: Home Office Branch Acquired from vendors 180,000 20,000 Acquired from home office 30,000 Additional information: 1
Subject:AccountingPrice: Bought3
Inventory per physical count on December 31, 2020:
Home Office Branch
Acquired from vendors 180,000 20,000
Acquired from home office 30,000
Additional information:
1. Inventory transferred to the branch from home office is billed at 125% of cost.
2. The home office received
3. The branch remitted 25,000 cash to the home office on December 31, 2020. The home office received and recorded this remittance on January 4, 2021.
The pre-closing trial balance of Nicole Company and its Angeles City branch for the year ended December 31, 2020 prior to adjusting and closing entries are as follows:
Home Office Branch
Debit Credit Debit Credit
Cash 35,000 10,000
Accounts receivable, net 80,000 50,000
Inventory, January 1, 2020
From vendors 230,000 50,000
From home office 20,000
Deferred profit 25,000
Fixed assets, net 870,000
Investment in branch 155,000
Accounts payable 221,000 45,000
Long-term debt 400,000
Common stock 300,000
Retained earnings, January 1, 2020 350,000
Home office equity 115,000
Sales 960,000 320,000
Purchases 800,000 120,000
Shipments from home office 90,000
Shipments to branch 84,000
Selling expenses 101,000 34,000
Administrative expenses 69,000 16,000
Totals 2,340,000 2,340,000 480,000 480,000
Requirement:
I. Prepare the year-end adjusting entries to bring the intra-company accounts into agreement. Be sure to adjust the other accounts in the trial balance as appropriate.
II. Complete the following analysis of the branch's inventory
Transfers above cost Transfers at cost Mark-up
Beginning inventory
Acquired from vendors
Acquired from home office
Purchases (from vendors)
Shipments from office
Goods available for sale
Ending inventory
Acquired from vendors
Acquired from home office
Cost of goods sold
III. Prepare the following year-end adjusting entries to:
- Record the branch income on the home office books
- Adjust the deferred profit account to the proper balance
IV. Prepare the year-end closing entries for the home office and the branch
V. Prepare the combining statement worksheet as of December 31, 2020 after completing requirements I to IV
VI. From the completed worksheet, prepare:
- An income statement and balance sheet for the branch
- An income statement and balance sheet for the home office
- An income statement and balance sheet for combined for home office and branch office